Personal Finance

My Expert-Recommended Strategy to Survive a Recession: Don’t Panic

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  • Instead of stressing over a recession, I’m taking my financial advisor’s advice not to panic.
  • She tells me to keep my hands off my investments.
  • I’m also taking control over my expenses where I can, starting with my utilities.

My grocery bill is where it hurts the most.

Perhaps because it’s a weekly expense, or maybe it’s because if one thing should be affordable, shouldn’t it be food? My research into why my grocery bill has gone up so drastically led me to a fun new term: stagflation. I love words and when I learn a new one, it circles around and around in my head. I’m on week six with this one.

Stagflation describes a period much like the one we’re in, where economic growth is stagnant and inflation continues to increase. This kind of situation often also sees a sharp rise in unemployment. At least we get a fun new hybrid word out of it, right?

Like so many people out there, my knee-jerk reaction to the fear-mongering messaging around the upcoming (current?) recession is to get swept up in the anxiety of it all. I’m a natural worrier (world class) and I’ve had to fight this instinct when it comes to managing my money. I’ve developed tools to help ground myself amid the panic. Here’s how I’m preparing (and not preparing!) for a recession.

Staying the course with my long-term investments

Based on past and present guidance from my independent financial advisor, Liz, at the New School of Finance, I’m leaving my medium-risk, long-term investments on the market, just as they are. Hands off! And, I’m not looking at them more often than I need to. They’re struggling, but my timeline for when I plan to access the funds in these investments gives them time to recover.

Namely, my RRSP (Registered Retirement Savings Plan) and one of my TFSAs (Tax-Free Savings Account) have seen a real dip on the market. I’ve already lost on them and I’m committed to letting them bounce back, rather than pulling the reduced funds and placing them more conservatively. (Note that these specific accounts are only available in Canada, not the US.)

A few weeks after my most recent session with my financial advisor, my dad called to ask what I planned to do about my investments that aren’t performing. He was worried about his own retirement fund and wondered what advice I’d decided to follow. I shared with him that I planned to stay the course and give my dwindling investments time to recover. Of course, his horizon time for using those funds is a lot closer than mine. In the end, he spoke with a financial planner at his bank who echoed my independent advisor’s sentiment (hands off!) and mine (stop checking on them and don’t panic!).

Feeling my feelings about inflation

I’m frustrated by the soaring prices of food, especially with so many shortages. My closest grocery store (one of the major chains here in Canada) is frequently out of important staples and when they do have them, the prices give me sticker shock.

My gas bill doubled this year, even though my usage is down. The price of gas went up, and even though I made sustainable upgrades on my home and an increased effort to conserve energy, which has led to a decrease in consumption, I’m still paying more. A lot more.

I’m doing what I need to do to keep my costs down and stick to a budget, but I have no control over inflation. Some things just cost what they cost, and the prices keep going up. I have a right to be upset about this. So do you. But in many cases, there really isn’t much we can do about it.

I’m working to believe that this situation is only temporary, but I’m also channeling my anger accordingly: When my bills go up, like the gas bill and my home insurance, I call and speak with them about why it’s costing me more and ask about how I can help bring that price down. Recent upgrades I’ve done to my home helped shave a few dollars off my recently increased home insurance payments. It’s not much, but it helps.

Taking advantage of government programs to improve the efficiency of my home

I’ve applied for the Canada Greener Homes Grant, which reimburses homeowners for upgrades that help increase the efficiency of their home, up to a certain amount per project. As you might expect with a government program, there’s a lot of red tape and things move pretty slowly, but it’s helping me do projects around the house to reduce heat loss and ultimately save on utilities by subsidizing a percentage of the total cost per project.

They’re projects I’ve had on my list since buying an old Victorian home in 2020, like insulating under floors, weather-proofing around doors, and installing new energy efficient windows. It feels good to know that I’m improving the value of my home, further investing in my biggest investment, reducing my utility costs, and getting a little money back for doing the work.

My strategy for preparing for a recession? Don’t panic. I’m intimately familiar with the psychology of money and rely on what I’ve learned so far to safeguard my finances as best I can and stay sane, even amid all the noise.

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